Friday, 7 July 2023

Market Summary

Market Summary 7 July 2023

Bitcoin Price: US$ 30,504.81 (-0.85%)
Ethereum Price: US$ 1,910.36 (-1.33%)  


Major global banks, including Citigroup, HSBC, and BNY Mellon, have been experimenting with a shared ledger system called a “regulated liability network” for wholesale payments. The Federal Reserve Bank of New York’s New York Innovation Center (NYIC) has collaborated on the project and believes the network has the potential to improve wholesale payment processing by enabling near-real-time synchronization and settlement of U.S. dollar payments on a 24/7 basis. While not endorsing the approach, the NYIC sees benefits in exploring tokenized regulated deposits and the interaction between central bank and commercial bank digital money on a shared ledger. In another news, the cross-chain router protocol Multichain has suffered an exploit resulting in the loss of approximately $130 million from various token bridges. Assets were siphoned off from Multichain’s Fantom, Moonriver, and Dogecoin bridge contracts, raising concerns about the platform’s security. Meanwhile, Lightning Labs has unveiled tools that allow AI applications, including OpenAI’s GPT series, to utilize Lightning’s second-layer payment network, enabling cheaper and faster bitcoin transactions and expanding the possibilities for AI use cases.

Several high-ranking officials have bid adieu to Binance, the beleaguered cryptocurrency exchange, as it braces itself to fend off multiple challenges. The departures of Binance’s General Counsel Han Ng, Chief Strategy Officer Patrick Hillmann, and Senior Vice President for Compliance Steven Christie follow the recent exit of Senior Director of Investigations Matthew Price. The resignations were reportedly triggered by CEO Changpeng “CZ” Zhao’s handling of an ongoing investigation by the U.S. Department of Justice, which focuses on alleged attempts by Binance to deceive U.S. regulators and engage in money laundering and sanctions violations. Sega, once a vocal proponent of GameFi and blockchain-based games, has reconsidered its stance and decided to withdraw from the sector. The company’s co-Chief Operating Officer, Shuji Utsumi, expressed doubts about the technology, stating that Sega is canceling plans to develop its own blockchain games. Utsumi described the action in play-to-earn games as “boring” and questioned the purpose of games that lack enjoyment. On the other hand, Bitcoin mining stocks listed in the U.S. have made a remarkable recovery after enduring the crypto market’s turmoil in 2022. The resurgence can be attributed to two factors: the positive price movement of Bitcoin and the growing interest from institutional investors due to filings by companies like Blackrock and Fidelity for Bitcoin exchange-traded funds (ETFs). Some Bitcoin miners are also diversifying their revenue streams by exploring opportunities in high-performance computing and artificial intelligence (AI). However, the mining industry operates as a unique game of survival, favoring miners with low costs and conservative debt profiles, allowing them to consolidate their market share and reap substantial profits when Bitcoin prices exceed production costs. Weaker miners with high debt face challenges during crypto market downturns, as evidenced by the recent bankruptcy of Core Scientific. Bernstein analysts anticipate further consolidation in the mining industry, with surviving miners expanding their capacity ahead of the next Bitcoin halving event, which is expected around April 2024. JPMorgan has also highlighted that miners with lower production costs will be better positioned to thrive in the long run as the industry becomes increasingly competitive.

JPMorgan’s research report suggests that the approval of a spot bitcoin exchange-traded fund (ETF) by the SEC is unlikely to have a significant impact on crypto markets. While there is growing optimism about approval, JPMorgan points out that spot bitcoin ETFs have existed in Canada and Europe without attracting substantial investor interest. Bitcoin funds, including futures-based and physically backed funds, have also failed to gain significant traction. Despite some advantages of physically backed ETFs, JPMorgan argues that spot ETFs offer a more direct and secure exposure to bitcoin. In other news, Polygon Labs undergoes a leadership shakeup as Ryan Wyatt steps down and Marc Boiron becomes the new CEO, while Bitcoin Ordinals experiences a surge in trading volume, reaching over $210 million in Q2, reflecting the platform’s growing popularity.




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